Does Timothy F. Geithner support jihad? Of course not. But the Treasury secretary on Tuesday lost a major round of a court case in which a taxpayer argues that government ownership of the insurance giant American International Group Inc. amounts to an unconstitutional government "establishment" of Islam. The controversy involves Shariah-compliant financing, part of which requires charitable contributions to those who "struggle for Allah" ("jihad"). The Thomas More Law Center, representing the plaintiffs in this case, has claimed there are a number of links between charities that receive funds as a result of Shariah-compliant financing and "terrorist organizations that are hostile to the United States." This is a long-standing practice whereby some front groups exploit charitable contributions to fund Islamic extremists.
Regardless of jihad, there is no dispute that, as U.S. District Judge Lawrence P. Zatkoff wrote on May 26, "AIG is the market leader in Sharia-compliant financing, which features financial products that comply with the dictates of Islamic law." It's undisputed that the government, as a result of last fall's bailout, now owns 77.9 percent of the "aggregate voting power of the common stock" of AIG. Furthermore, Judge Zatkoff wrote, "after the government acquired a majority interest in AIG ... the government co-sponsored a forum entitled 'Islamic Finance 101.' "
Why is all this important? Because in the case of Kevin J. Murray v. Timothy F. Geithner and Board of Governors of the Federal Reserve System, Mr. Murray argues that if the government owns AIG and AIG extensively practices Shariah-compliant finance, then the government effectively is supporting Islam. That would be unconstitutional.
Mr. Geithner and the Fed filed a motion for the judge to dismiss the case immediately before coming anywhere near a full trial. In a devastating 16-page decision, Judge Zatkoff slapped down Mr. Geithner and company, allowing the case to go forward. The judge acknowledged that the government bought AIG only to stave off an apparent crisis. He then wrote: "Times of crisis, however, do not justify departure from the Constitution."
This case tests important constitutional precepts and deserves a full hearing. It also puts heat on the government's overactive economic masters, who ought to be more wary of rash government takeovers of private industries.